Novo Nordisk Annual Report 2021
Contents
Introducing Novo Nordisk
Strategic Aspirations
Key risks Management
Consolidated statements
Additional information
Novo Nordisk Annual Report 2021 66
3.4 Provisions and contingent liabilities
DKK million
At the beginning of the year
Additional provisions, including increases to existing provisions
2020 Total
35,733
113,810
(107,220)
Provisions
Provisions Provisions
for sales
rebates¹
34,052
2,451
for legal for product
disputes returns
795
155,602
608
493
2,042
461
Amount used during the year
(141,370)
(657)
(450)
(214)
Adjustments, including unused amounts reversed during the year
(284)
(419)
13
(280)
Other
provi-
sions 2021 Total
39,340
157,164
(142,691)
(970)
Effect of exchange rate adjustment
2,822
174
7
48
3,051
At the end of the year
50,822
2,157
858
2,057
Non-current liabilities³
Current liabilities
255
50,567
1,895
316
1,908
55,894
4,374
(3,061)
39,340
4,526
262
542
149
51,520
34,814
78
1. Provisions for sales rebates are related to US Managed Care, Medicare, Medicaid and other US rebate types, as well as rebates in a number of European countries and Canada.
2. Other provisions consists of various types of provision, including obligations in relation to employee benefits such as jubilee benefits, company-owned life insurance, etc.
3. For non-current liabilities, provision for sales rebates is expected to be settled after one year, provisions for product returns will be utilised in 2023 and 2024. In the case of provisions
for legal disputes, the timing of settlement cannot be determined.
Contingent liabilities
Novo Nordisk is currently involved in pending litigations, claims and
investigations arising out of the normal conduct of its business. While
provisions that Management deems to be reasonable and appropriate have
been made for probable losses, there are uncertainties connected with
these estimates.
Pending litigation against Novo Nordisk
Numerous claims alleging pancreatic cancer, pancreatitis, and thyroid cancer
have been filed in US courts against various incretin class manufacturers,
including Victoza® and Novo Nordisk. As of 31 January 2022, 369 plaintiffs
have filed product liability cases against Novo Nordisk, the vast majority
alleging pancreatic cancer. In March and April 2021, the Federal MDL and
State JCCP courts granted defendants' motions for summary judgment on
federal pre-emption and general causation grounds thereby dismissing all
the pending cases against Novo Nordisk relating to Victoza. Plaintiffs have
filed a notice of appeal of the Federal Court ruling, and they have the right
to file a similar notice of appeal of the State Court ruling. Final decisions on
both appeals are not expected before the end of 2022. Novo Nordisk does
not expect the lawsuit to have a material impact on Novo Nordisk's financial
position, operating profit or cash flow.
In September 2021, Novo Nordisk announced that it has reached an
agreement in principle to settle the previously disclosed securities class
action litigation pending in the Federal District Court of New Jersey, US. The
settlement was reached after a voluntary mediation process and resolves
claims brought by plaintiffs for alleged violations of US securities laws. The
settlement contains no admission of liability, wrongdoing, or responsibility
by any of the defendants and will include a full release of all defendants in
connection with the allegations made in the lawsuit. Under the terms of the
settlement agreement, Novo Nordisk has agreed to pay USD 100 million
(inclusive of all plaintiffs' attorneys fees and expenses and settlement costs).
The payment is covered by insurance.. The settlement is subject to a court
approval process, which could take several months.
In January 2022, Novo Nordisk announced that it has settled the previously
disclosed securities lawsuit filed against Novo Nordisk in Denmark by a
number of institutional shareholders, which included a claim for a total
amount of DKK 11,800 million. The lawsuit alleged that Novo Nordisk made
misleading statements and did not make appropriate disclosures regarding
its sales of insulin products in the US. The settlement contains no admission
of liability, wrongdoing or responsibility by Novo Nordisk and no payment
will be made by Novo Nordisk to the plaintiffs.
Novo Nordisk is currently defending eight lawsuits, including two plead as
putative class actions, relating to the pricing of diabetes medicines. Four
of these cases are pending in New Jersey federal court; three are pending
in federal courts in Texas, Florida, and Mississippi and the remaining one
is pending in state court in Kentucky. All pending matters also name as
defendants Eli Lilly and Company and Sanofi, while certain matters also
name Pharmacy Benefit Managers (PBMS) and related entities. Plaintiffs
generally allege that the manufacturers and PBMS colluded to artificially
inflate list prices paid by consumers for diabetes products, while offering
reduced prices to PBMS through rebates used to secure formulary access.
Novo Nordisk does not expect the lawsuits to have a material impact on
Novo Nordisk's financial position, operating profit, or cash flow.
In 2016, Novo Nordisk US received a Civil Investigative Demand from the U.S.
Department of Justice ("DOJ CID") relating to potential off-label marketing of
NovoSeven® (including high dose and for prophylactic use) and interactions
with physicians and patients. The DOJ investigation was likely prompted by
a lawsuit filed by a former Novo Nordisk US employee (the "Relator") under
seal in the Western District of Oklahoma. Relator alleges Novo Nordisk
US caused the submission of false claims to Medicare, Medicaid, Federal
Employees Health Benefits Program and private insurers in California as a
result of the same conduct that was the subject of the DOJ CID. As a result
of these allegations, Relator (on behalf of the federal and certain state
governments) seeks injunctive and monetary relief. A consolidated complaint
was jointly filed by Relator and the State of Washington on 9 March 2020.
The consolidated complaint was unsealed (made public) by the court on
28 May 2020. Novo Nordisk has filed two motions seeking dismissal of the
complaint, both of which are currently pending and awaiting ruling from the
Court. Novo Nordisk does not expect the lawsuit to have a material impact
on Novo Nordisk's financial position, operating profit or, cash flow.
Since January 2021, Novo Nordisk has changed its policy in the US related to
the 340B Drug Pricing Program, whereby Novo Nordisk no longer provides
340B statutory discounts to certain pharmacies that contract with covered
entities participating in the 340B Drug Pricing Program. Novo Nordisk's
contract pharmacy policy has been challenged by the US Department of
Health and Human Services. On 17 May 2021, the US government issued
a letter to Novo Nordisk asserting that Novo Nordisk's policy violates the
340B statute. Novo Nordisk believes its policy does not violate the 340B
Drug Pricing Program requirements and has commenced litigation against
the government seeking a declaration that its 340B policy is consistent with
relevant US laws. On 5 November 2021, the US District Court for the District
of New Jersey issued a decision on Novo Nordisk's motion for summary
judgment holding that the use of contract pharmacies is consistent with
the 340B statute and that manufacturers have no statutory right to imposeView entire presentation